Hi. My name is Robert Mansour. A little while ago my son turned 18 years old. Believe it or not, he's an adult. Technically speaking, legally speaking, he's an adult. I don't think he's an adult, but you know what I'm talking about.
What I had him do was I prepared a health care directive for him and a durable power of attorney. Because he is an adult, if anything happens to him, my wife and I do not have automatic access to his medical records. We do not have automatic access to his college records and his grades and all of the other things that we might need to help him with. What if we needed to handle some of his financial affairs or we needed to make health care decisions for him and he cannot? Because he is an adult, we can't act like his parents any more and just make decisions for him. We're not technically his parental guardians any more. He is an adult.
What I had him do was prepare a durable power of attorney, where he allows my wife and I, his mother and I, to have the authority to help him with financial matters. We also signed a health care directive so that we can have the authority to handle health care matters for him if he cannot. When you turn 18 years of age, it is very important to consider, at the very least, a durable power of attorney, an advance health care directive.
Those 2 things and you name the people that you love and trust, perhaps your parents, one or both of them or whatever you want to do. Remember because you're 18, you're technically an adult and people do not have the legal authority to do things on your behalf unless you give it to them. Once again, 18 years old, durable power of attorney, advance health care directive. If you have any questions about this, please visit my website at mansourlaw.com for much more information. Thank you very much.
So what do you do when one of the children in the family needs to live at the premises after the parents pass away? Hello everybody, my name is Robert Mansour. This is an issue that happens sometimes when one of the kids wants on the premises after both parents die.
So sometimes a family will come in and they'll say, "Maria is living with us. We have seven kids, and Maria is one of them. She's living in our house with us. She's taking care of us. She prepares our food. She goes to the grocery store. She's been lovely and very helpful, but she's fallen on hard times." I often have to ask the client, "Well, what are we going to do after you both pass away? Is Maria going to get to stay in the house?", or Johnny, or whoever the sibling might be. So you have to be very careful about that because the other six or seven kids in the family may not like that. They may want to sell mom and dad's house and divide the money. They may want to rent out mom and dad's house and divide the proceeds of the monthly rent. Does that child, Maria, Johnny, or whoever is living there, do they get to stay there forever?
So this is one of those issues that I talk about with clients. I say, "Well, what do you want to do?" On a recent case, for example, a client said, "Well, I don't want them to stay there forever, but I also don't want to kick them out." So we came up with a plan that allowed Maria, in this case, to stay at the home and to live there for an additional six months after both parents pass away. We figured that would give Maria enough time to figure out what's going to happen, another opportunity to maybe find an apartment, to move out, or make other arrangements. Because the house was worth $500,000 and other children were interested in selling that home and dividing the money.
We also indicated that the house needed to be sold within a certain period of time. Otherwise, the trustee has no real guidance. Now in some cases, we leave it up to the trustee. But in other families, it might be good to put some kind of time limit on it and say Maria needs to move out by this time and the house needs to be sold by X amount of time; within six months, one year, or whatever the case may be. These are issues that need to be discussed whenever there is real property involved with family residence. What are we going to do about that residence? Do we sell it? Do we rent it? Does somebody get to live in it?
These are issues that, in some families, it's very important to discuss during the estate planning consultation. What's more important is that the estate planning documents, the living trust, the will, whatever the case may be, says with great detail what is going to happen. Because it is better to have more instructions in there than to leave it up to chance, or leave it up to the trustee to make things up as they go along, especially when there are more than two or three kids involved. That's really where you want to come up with some distinct and good guidelines for the trustee to follow. Thank you for joining me on this video. Again, my name is Robert Mansour. I'm an estate planning attorney here in the Los Angeles area. Thanks for watching. Please call (661) 414-7100 for help with your estate plan.
I recently had a client asked me how she could protect her son's inheritance from her daughter-in-law. Needless to say, this client did not have a good relationship with her daughter-in-law and suspected that the only reason the daughter-in-law married her son was because of the expected inheritance.
I explained to her that if we design her estate plan well enough, her daughter-in-law would not have to have any access to her son's inheritance. We could design the trust to distribute portions of the inheritance upon completion of certain events (like getting a college degree or attaining a certain age). The key is to NOT allow for automatic inheritance by the son.
If her son inherits automatically upon her death, there is nothing we can really do to stop him from sharing his inheritance with his wife. After all, he could take all the money and simply give it to his wife. This is the United States - people are free to act as they wish - and there is only such much you can do "from the grave." He would probably do what most people do when they inherit - they take the inheritance and put it in a common joint account with their spouse. As such, nothing could stop the daughter-in-law from getting at the money.
If her son inherits the money, puts it in a common account for a few years, the daughter-in-law would probably attempt to claim half that money if they were to ever divorce! Therefore, we designed a living trust that would protect the inheritance by keeping it in the trust and prevent distributions if there was any danger suspected by the trustee. In other words, the distribution to the son would NOT be automatic - it would depend entirely on the trustee's complete discretion. If the son is not "in control" of the inheritance, and the decision rests with someone else, there is a strong argument that the inheritance hasn't "vested" and is still sitting in the living trust.
The ultimate question is whether or not the inheritance automatically "vests" in the son upon my client's death. If the trust simply says, "After I die, my son gets my estate" then there really is no safeguard, no layer of protection between the son and the money. If the trustee can indefinitely hold the inheritance in the trust, the son would have a very strong argument that the money is not vested. As such, the daughter-in-law would have a much harder time getting to that money.
There are many ways that we can design a living trust to protect kids from unscrupulous daughters-in-law or sons-in-law. These solutions aren't always perfect, but they may be better than handing a child his/her inheritance outright. Feel free to contact my office if you like more information about this subject. Call (661) 414-7100 to arrange for a consultation. Hopefully we can design an estate plan that addresses your concerns.
There is an interesting issue that surfaces from time to time when I'm helping my clients with their estate plan. Sometimes, they have a child who needs to live in the family residence after their deaths. The child in question may already be living there or may need a place to stay at some point in the future. Whatever the case may be, the clients want to make sure that child has a place to live. These “children” are often adults who are down on their luck, jobless, or otherwise haven’t been able to move out of the house. In some cases, the child may have special needs or other challenges. In other cases, they are simply financially challenged in someway.
This can be quite tricky when there are other children/beneficiaries involved. For example, one of the other children may not be crazy about the idea of allowing a sibling to simply live there after the parents have died. They see that child as a “squatter” or a “freeloader” who isn’t paying their dues.
Another child may want to rent the house as a way to generate revenue for the beneficiaries. Another child may insist on selling the house and dividing the proceeds. Therefore, if you want one of your kids to live in your house after you pass away (or in other real estate you may own), you need to spell things out clearly. You need to set very strict parameters about how long they will be allowed to live there. Are there any other restrictions or parameters? For example, will the child living at the house be expected to pay the utilities? How long will he/she be able to stay there until they have to move? What if the other kids need to sell the house for financial or other reasons? Can the Trustee evict the child living there?
The more you address in your living trust, the better off your beneficiaries will probably be. Sometimes, when there aren’t enough instructions in the document, such can lead to infighting in the family. This is especially important when there are more than two siblings involved. Even when all the siblings get along well enough, their respective spouses may ruin the harmony.
Therefore, here is the lesson: If you want one or more of your children to be able to occupy your real estate after you have passed away, then you need to be very specific about your intentions and your expectations. The clearer you are, the better things will probably turn out for everyone involved.
If you need help or other guidance with your estate plan, call attorney Robert Mansour at (661) 414-7100 and arrange for a consultation.
Every so often, I get a call from the adult child of a potential client. For the purpose of this blog, let's call the adult child "Johnny." So, Johnny will call my office and say something like, "Mom needs to change her trust. Can we come and see you?" First question that pops into my head is "Does Mom REALLY need to change her trust or is there something Johnny wants to change?" I also wonder, "Why can't Mom call my office and talk to me herself? Is she not well enough to make a change to her living trust?" I make it clear to the person calling that my client is NOT them, but instead the senior parent for whom they are calling.
Truth is, invariably one child ends up doing most of the heavy lifting when it comes to the legal affairs and personal affairs of an elderly client. Sometimes, even when there are 4 or 5 children, only one of them rises to the occasion and takes mom to the store, takes mom to doctor appointments, and sometimes...takes mom to the lawyer.
As the attorney, I have to be very careful to make sure that this child is not simply pushing their own agenda on their parents. Therefore, ultimately, the child shows up with their parent to the meeting at my office. If it's OK with the parent, I will allow the child to remain in the room for most of the meeting. If I suspect the parent is changing everything to favor that particular child, I grow suspicious. It is true that sometimes parents do favor the children who help them the most during their elderly years.
Nevertheless, it is my practice to always excuse the child from the room (at some point, usually near the end of the meeting) and speak candidly with the senior. I want to make sure that the plan (or change to the plan) truly reflects their wishes, and not simply the wishes of the child who brought them to the meeting. It is a dangerous line to walk sometimes.
Therefore, I always double-check with the client to make sure it's really what they want, and not simply what their child wants. Sometimes the seniors will tell me privately that their wishes are not the same as what they articulated when the child was in the room. In that case, we need to proceed privately in subsequent sessions without the adult child present in the room. If the adult child insists on being involved, I will likely need to withdraw from the case.
If you need help developing your own estate plan, call (661) 414-7100 and inquire about an initial consultation.
"Isn't everything simply going to go to my kids?" That is a common question I get when I'm helping clients with their estate plan. While your kids will likely inherit from you, they don't necessarily get all the assets automatically. The probate court may need to get involved. Also, if your kids are minors, there are many limitations on what they can get.
Even if your kids are old enough (older than 18) to receive their inheritance, is it a good idea for them to inherit everything at once? Perhaps it is better to protect your kids from divorce, creditors, spendthrift tendencies and much more by having their inheritance protected in the family living trust. It's very important to think these things through. Why should you work so hard your entire life only to have your estate pass to one of your children and then have it squandered? Also, if your children are in trouble with creditors, in a bad marriage, etc., your estate can easily fall into the wrong hands!
If you want to discuss protecting your children with a solid estate plan, call my office at (661) 414-7100 and ask for a consultation. Thank you for the chance to assist.
Instead of creating separate trusts for each child immediately upon your death, you may want to consider creating a common trust (pot trust) for your children.
When dealing with a common trust, the trustee can spend the trust money on any child that might need the money more than another. For example, perhaps one child is very wealthy and has no need for the inheritance. More commonly, you may have already provided for the college expenses of one child and perhaps your other children have not yet started college.
If each child takes a share immediately upon your death, some of the children may effectively be receiving less since they still have to pay for schooling etc. After the youngest child attains a certain age, your trust can then divide equally among the children. This is just one approach you might consider with your estate planning lawyer.
If you wish to discuss your estate planning needs, visit Santa Clarita wills and trusts lawyer Robert Mansour. Call (661) 414-7100 to make an appointment.
When it comes to your living trust, it is very important to be very clear about your intentions. You cannot be too clear. I had two clients who wanted their real estate to pass to their children. The problem is they had seven kids! I told them, do you really want your seven children owning real estate together? One child might want to rent the property, one child may want to live there, another may want to sell it, and another may want to keep it, etc. Sometimes, too many chefs in the kitchen make for chaotic results. Sometimes, children argue after their parents pass on. They argue about money, real estate, mom and dad's true intentions, and so on. Sometimes the kids don't argue, but their spouses and others influence them to act in unanticipated ways. I asked the couple, "Is this what you really want?" They said, "Oh no, what we really want is that our kids sell the real estate and then split the net proceeds evenly among them." I explained, "Then we need to make your intentions clear in your living trust. If we make your intentions clear, there is less chance for fighting among the siblings after you pass away."
Adding Your Child to Title, Real Estate or otherwise, May Not Be the Best Idea.
Some of my older clients think that putting their child on title to their home is a good idea. After all, they want their child to get the house after they die. However, putting kids on title may have unintended tax consequences upon the sale of the home. For example, if the child wants to sell the home, the child will have to pay capital gains taxes on the home. That is figured by using the "cost basis" to the home and the amount the house was sold. For example, if Mom and Dad bought the house for $100,000 and it sells for $800,000, the children will need to pay taxes on the gain of $700,000. However, if the home was inherited by the children, and sold soon afterwards, there might be no taxes at all!
Also, anytime you add a person to your assets, you have essentially added a "bull's-eye" to that asset. Why subject your asset to the problems of others?
Have you ever given any thought as to how you will pass your financial wealth to your children? Responsible provisions can be built into your living trust to protect your children and their inheritance, no matter how modest or how abundant your wealth might be. Keep in mind that most wealth in this country is lost between one or two generations because people simply don’t take the time to learn how to best pass on their wealth. Even if you don’t have a great deal of wealth, why should your family lose what little it may have?
When creating an estate plan, most parents have to decide how and when their children should inherit from them. In most cases, each child receives an equal share. In some cases, distributions can be deferred to certain ages – for example, 1/3 at 25, 1/3 at 30 and the balance at 35. Some parents also allow other distributions to their children in addition to age-based distributions. For example, additional distributions can be made for a child’s health, education, or support of some kind. These kinds of distributions are usually governed by the living trust – the main component of most estate plans.
Another common feature is to NOT distribute to your children. In some living trusts, we will build in special language that allows the trustee to withhold distributions to a child, even when an age-based distribution comes due. For example, if a child is a spendthrift and is unable to manage money, hanging out with the wrong crowd, etc., the trustee can withhold distributions. In some cases, there may be looming trouble with creditors or perhaps a divorce on the horizon. In some cases, distributions are made to kids who then file for divorce a few years later. Guess who often takes half of that inheritance during the divorce? That’s right – your ex-son-in-law or ex-daughter-in-law. In some cases, children should not inherit if they have substance abuse problems such as alcoholism or other drug problem. In those cases, we need to make sure we build in some reasonable trust provisions to offer guidance as to when distributions can be made to such a child. Finally, in some cases, distributions to a child may not be prudent if that child has special needs (autism or other disability).
Some parents may wish to entertain the “pot” trust. That means that each child does not get an equal share. Instead, the inheritance is all put into one “pot” which is used by the Trustee depending on each child’s need. One child may need more than another. For example, one child might marry an independently wealthy spouse and have little need for an inheritance, while another child may be in more need of distributions. Sometimes the “pot” approach is helpful when one child has already received a college education and it would not be fair to give them another distribution when other children may not be done with high school yet. The pot trust is a helpful approach in some circumstances, and parents should consider it.
When working with your estate planning attorney on your living trust, make sure you spend some time designing “how” your children will inherit from you. Will they get everything in one lump sum? Is that a good idea? Make sure your wishes are outlined in writing!